Coverage Scope

• First-party vs. third-party coverage - First-party covers direct losses (data recovery, business interruption, ransomware payments), while third-party covers liability claims from affected customers or partners

• Exclusions - Many policies exclude nation-state attacks, acts of war, unpatched systems, or losses from known vulnerabilities

• Ransomware payment coverage - Not all policies cover ransom payments, and some require pre-approval

Requirements & Obligations

• Security controls - Insurers increasingly require MFA, endpoint detection, regular backups, patch management, and security training before issuing policies

• Pre-breach obligations - Companies must maintain specific security standards or risk claim denial

• Notification requirements - Strict timelines for reporting incidents to the insurer

Financial Considerations

• Rising premiums - Cyber insurance costs have increased significantly due to rising claims

• Deductibles and sub-limits - High deductibles and caps on specific coverage types (e.g., business interruption)

• Retroactive date - Claims-made policies only cover incidents discovered during the policy period

Application Process

• Detailed questionnaires - Insurers conduct thorough assessments of security posture

• Misrepresentation risks - Inaccurate information can void coverage

• Underwriting scrutiny - High-risk industries face more stringent requirements

Policy Management

• Claims process complexity - Cyber claims require extensive documentation and forensic investigation

• Insurer-approved vendors - Many policies require using specific incident response firms

• Policy evolution - Coverage terms change rapidly as threats evolve

Companies should work with experienced brokers and legal counsel to ensure adequate protection aligned with their specific risk profile.